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Today, we're diving into an important topic that affects many Canadians – the new capital gains rules in Canada. Whether you're an investor, a homeowner, or simply curious about how these changes might impact you, stick around as we unpack what you need to know. First, let's quickly recap what capital gains are. In simple terms, a capital gain is the profit you make from selling an asset like stocks, bonds, or real estate for more than you paid for it. The government taxes these profits to generate revenue. But, the way these gains are taxed can change, and that's exactly what's happening now. Under the previous rules, 50% of your capital gains were included in your taxable income. For example, if you made a $10,000 profit on an investment, $5,000 of that would be taxed at your marginal tax rate. However, starting June 25, 2024 there's a new twist to these rules. The 2024 budget would increase the "inclusion rate" from one-half to two-thirds on capital gains above $250,000 for individuals. So in other words, for the first $250,000 in capital gains, an individual taxpayer would continue to pay tax on 50 per cent of the gain. For every dollar beyond $250,000, two-thirds would be taxable. If you found this video helpful, give it a thumbs up and don't forget to subscribe for more updates. If you have any questions or topics you'd like us to cover, leave a comment below. Thanks for watching, and see you next time!
In Canada, GST & HST are consumption taxes that apply to the sale of most goods and services.
There are 3 different types of supply in Canada.
Exempt Supply
0 Rated Supply
Taxable Supply
Which type of service / goods you supply will determine whether you charge GSTor not and can claim GST or not.
#1) Exempt Supply
I think this is self explanatory, the type of service / good you provide is completely exempt from GST, therefore you NEITHER collect or claim GST, clear as mud?
Example would be music lessons are exempt supply
A music teacher would not charge gst and cannot claim gst on the business expenses.
Most medical services performed by doctors and dentists are exempt supplies.
I’ll put a link to CRA website where you can reference a list of exempt supply
If your business only provides exempt supplies, you do not need to register for a GST account
#2) 0 RATED Supply
This one is tricky, and is Different from EXEMPT supply. A Zero rated supply means the business does charges GST, but at 0%. So essentially does not collect GST. Where this is different from EXEMPT Supply, is that the business CAN claim GST on business expenses
An example of 0 rated supply would be the supply of basic groceries.
So a grocery store, would technically collect GST on basic groceries, but would be able to still claim GST on business expenses
0 rated supply also applies to taxable supplies that are EXPORTED.
For example, if you sold merchandise / services to someone in the US.
So make sure if you are a provider of 0 rated supply, register for a GST account so that you can claim back the GST paid on business expenses!!!!
Finally, #3) Taxable Supplies
This would be any other supply that is not exempt or 0 rated, and thus GST is charged collected, and GST can be claimed on business expenses.
An example of taxable supply would be hey, my accounting services.
I charge GST to my customers, and claim GST on my business expenses. Easy peasy
Now if my sales were less than $30K I can be exempt from registration, but I wouldn’t be able to claim the GST on my business expenses. So decipher for yourself whether you want to voluntary register early, or wait until you reach $30K. Most startups spend a lot in the beginning, so its not a bad idea to register early
Again, I’ll provide a link below with reference to CRA website where you can dig in more details.
Thanks for watching, and if you like these videos please subscribe and leave a comment.
Are you a video game developer and wondering if you should incorporate?
Well, here’s a video for you.
Generally for all businesses, the sweet spot to incorporate is when you are making more than you need, so that you can shelter the excess in a corporation at a much lower tax rate!
Now tax rates varies by provinces, but for example in BC highest personal tax rate is 53.5%, and for corps 11%, that’s 42.5% tax deferrals, until you pay yourself.
Plus of course your business can deduct business related expenses from your income, which lowers your income, and lowers, the tax bill.
Now for Video Game developers in Canada specifically there is an EXTRA incentive called the Interactive Digital Media Tax Credit. This tax credit varies across provinces, and is very generous, ranging from 17.5% to 44% of eligible expenses.
Now before you go ahead and incorporate, you want to make sure that you are not flagged as a Personal Service Business (I’ll put a link to video for more info), but basically, PSB are like incorporated employees. Your business is serving only 1 customer. This set up is frowned upon and CRA can see right through it. You are actually an employee and just incorporated for the tax benefits.
I hope you find t his video helpful, subscribe if you like the content.
Are you a video game developer and wondering if you should incorporate?
Well, here’s a video for you.
Generally for all businesses, the sweet spot to incorporate is when you are making more than you need, so that you can shelter the excess in a corporation at a much lower tax rate!
Now tax rates varies by provinces, but for example in BC highest personal tax rate is 53.5%, and for corps 11%, that’s 42.5% tax deferrals, until you pay yourself.
Plus of course your business can deduct business related expenses from your income, which lowers your income, and lowers, the tax bill.
Now for Video Game developers in Canada specifically there is an EXTRA incentive called the Interactive Digital Media Tax Credit. This tax credit varies across provinces, and is very generous, ranging from 17.5% to 44% of eligible expenses.
Now before you go ahead and incorporate, you want to make sure that you are not flagged as a Personal Service Business (I’ll put a link to video for more info), but basically, PSB are like incorporated employees. Your business is serving only 1 customer. This set up is frowned upon and CRA can see right through it. You are actually an employee and just incorporated for the tax benefits.
I hope you find t his video helpful, subscribe if you like the content.
